No more Twinkies, Hostess belly-up

Tiffany, purpleinopp GardenWeb, Z8b Opp, ALNovember 16, 2012

Hostess company has announced that they were unable to reach an agreement between their company and the "bakers' union" that makes their products. The CEO of Hostess said the union was willing to let those jobs go (18,000) to send a message to other companies with which they have contracts.

I'm sure plenty of people would be happy to bake Twinkies for minimum wage, like so many other jobs. What is up with this? Why can't they just hire other workers? What do you think?

You have to wade through about 900 stories to find out the Company had already filed for reorganization and was planning to close 9 of it's bakeries before a strike even started.
"Hostess filed for bankruptcy in January, the second time in the last eight years. When the company emerged from bankruptcy the first time, it was able to do so because its union workers agreed to $110 million in concessions and facility closures that cost about half of the unionized workforce their jobs."

SOUND FAMILIAR

After the workers agreed to the concessions, three private equity companies, Ripplewood Holdings, Monarch Alternative Investmenes, and Silver Point Capital, took control of the company and pledged to invest in modernizing the facilities that stayed open and rebranding the company's signature products, Wonder Bread, Twinkies, Hostess Cupcakes, etc.

Instead, money that was supposed to be reinvested in the company was diverted to pay private equity fees, interest on the debt that the new owners took on to buy Hostess, and executive salaries and bonuses.

I think the world will go through a reset. The Greed had taken over the unions were losing ground.

Business moved to China they are starting to realize they are being used and rebelling. Soon there will be no place to run and hide. A reset of how far greed can go before they realize they have to pay a living wage. Everyone cannot be a CEO those are few and far between jobs.

Instead, money that was supposed to be reinvested in the company was diverted to pay private equity fees, interest on the debt that the new owners took on to buy Hostess, and executive salaries and bonuses.

Unsecured creditors suspect that Hostess Brands Inc. may have "manipulated" its executives' pay--sending its former chief executive's salary, in particular, skyrocketing- in the months leading up to its Chapter 11 filing, in an effort to dodge the Bankruptcy Code's compensation requirements, according to a redacted court filing reviewed by Dow Jones.

The official committee representing Hostess's unsecured creditors wants to launch a formal investigation in the bankruptcy case, hoping to dig deeper into the bakery company's senior executive compensation. The information the group has already gathered suggests "the possibility" that the company converted a chunk of its top executives' pay from performance-based bonuses to guaranteed salary, "at least in part to sidestep" rules designed to ensure that companies in bankruptcy aren't enticing their employees to stay on board with the promise of cash.

"As such, the debtors' continued payment of the executives' salaries in these increased amounts may violate the Bankruptcy Code," the unsecured creditors said in documents that were filed with the U.S. Bankruptcy Court in White Plains, N.Y., but largely redacted. Dow Jones was able to view those details because when the papers were saved to a word-processing program, the redactions disappeared.

A spokesman for Hostess dismissed the creditors' allegations.

"We do not believe their theory has any basis in law," he said. "Nevertheless, we are working cooperatively with the committee to address their concerns and expect to resolve this amicably."

In court papers, the creditors say testimony from Hostess's executive vice president of human resources indicates that "in the run-up to bankruptcy"--when Hostess had already hired bankruptcy attorneys--it was also working to shift its compensation structure. Hostess slashed bonuses payable only if certain performance goals were met and, on July 26, the company's compensation committee signed off on "substantial salary increases for numerous senior executives," the creditors said, calling the jumps "dramatic."

Instead, money that was supposed to be reinvested in the company was diverted to pay private equity fees, interest on the debt that the new owners took on to buy Hostess, and executive salaries and bonuses.

I've never bought the Hostess baked goods or any other similar packaged bake goods BUT I am glad I won't have to miss my Wonder Bread leftover turkey sandwich the day after Thanksgiving or Christmas...both turkey days here.

I'm not sure who has the manufacturing rights for Hostess Potato Chips in Canada but I would miss those....

Our in-store baked goods options are Albertsons and WalMart, both within a ten mile radius.
Both are just terrible bakeries all tastes to me like crisco shortening, and I've seen what goes on behind the bakery counter during our disgusting fly season which tends to last about a month or a bit more.
They can't do anything about it, in truth, but I can't believe people will still buy that nasty fly landed stuff knowing that the flies are crawling on all the baked products before being wrapped up and put out for sale. Same at the meat counter and deli counter.

They just opened a Whole Foods in the city. Next month when the customer hysteria about having a Whole Foods has subsided somewhat, we plan to drive there and check it out, I've heard many good things about the better product quality sold in Whole Foods, but the traffic to get to it would be so terrible all the time (even before Whole Foods was built the traffic was terrible) that it could never become a regular go-to for us.

I don't eat much at *all* in the way of sugar anymore and if DH has a real craving for a sugar cookie (his weakness) I will make up a half batch of dough for the freezer, then break off a piece of dough for baking just a few every time he is "needing" a couple of cookies.
I do miss bread and will sometimes make up a honey oatmeal bread and will smother it with a good butter, especially when I'm carb loading for a few days anyway and plan on making a savory stew or my carb loaded veggie/ chicken soup (my favorite), or lasagna, twice baked spaghetti (sinful) or gumbo.
It seems winter time when it's really cold is when I crave carbs and comfort meals, and tend to indulge more during those times . Mid Spring- late Autumn, though, we eat very very simply (big, busy spinach salad, grilled piece of meat) and it's easy to be and stay very carb and sugar curbed conscience.

To us, Twinkies always tasted like plastic tubes wrapped in plastic tubes, for the taste alone we never had them in the house - nor the hostess stuff or little debbie - all are pretty much the same plastic stuff to me. Like Vegemite for the Aussies, I think kids need to grow up eating this stuff to think it delicious. Same thing with pizza, it tastes not good, processed stuff. We have never been big on pizza but when we want one, it's very easy to make, and we don't make it like it tends to be sold at the fast food franchises - baked on the grill, barely any marinara sauce, lots of spinach, goat cheese, very thin good ham from a leftover spiral ham sometimes, mushrooms, some chopped red pepper topped with just a bit of mozzarella is how we like it.

RE: the twinkie thing - I tasted Vegemite on a cracker once, it was disgustingly salty to me, but my friend had some on a couple of crackers every evening, she was English and loved her Vegemite (or Marmite?) forget which. She grew up on it though, so that explained THAT. ;)
I figure the same thing happens with kids who grow up on the hostess stuff, that is what they know so that is what they think is delicious.

I used to belong to a hippy fodder coop that was based in Tuscon, AZ and would drive a semi full of organic food and so on up to Colorado once a month, stopping by at different mini-coops where they'd drop off a pallet or two of stuff.

I always thought it funny that the smaller items were often re-packed in Hostess Twinkie boxes.

The head of the Tuscon coop absconded with the payroll one day, and that was that.

None of my friend can believe I have never in my life had a Twinkie or any Hostess product. I remember begging my mother to buy Wonder bread when I was little, and she would not. What I loved as a kid and she wouldn't buy either were chocolate Tastycakes , three to a pack for a dime. My mother was the world's best cook and baker, and yet I loved these and would buy them when she wasn't around. I'd buy them for my kids occasionally too when they were little. Tonight over dinner, we were talking of this and daughter said...have you tasted TC's recently, and we both agreed that now they are God awful. We haven't had any in about 10 years but they were nothing like the ones we remember. Tasted like chemicals, if I recall.

I know Hostess has been struggling for years. I feel terrible for the employees and their families who are now unemployed, as well as all the collateral businesses affected - and they are legion. It's going to have a terrible effect on the economies of a lot of cities and towns. Hopefully they will be able to sell their brands quickly and put some people back to work.

But......a lot of their food is dreck. The only thing I could ever choke down was a Hostess cupcake, but that was when I was a kid. Other than their rye bread, now I doubt I would eat any of their products.

I think the last time I saw anyone eating a Twinkie was in my high school cafeteria. (LONG time ago, people!)

My mother would buy Wonder Bread before we kids would go to feed the ducks bits of it. (Poor ducks.)

This is just another buy, drain and liquidate corporate move. Non-union employees just quit rather than take another (30%) pay cut. The union struck, thus becoming the 'fall guys' for the already-in-place plan to dump the operation.

the brands will be sold like many others in the past. twinkies will be back.
hell Pepsi went bust in 1930's and was bought disgruntled coke distributor.

the company was obviously in trouble and possible close to death.
the union just pulled the plug.
in companies' defense it is stupid to strike against company in bankruptcy. since it makes it easy to just shut company down.

Aren't they disguised "retention" bonuses to stick with a company, supposedly guiding it through a successful sale/restructuring? Most of the execs would bail if not promised huge rewards. There oughta be a law against retention bonuses and I guess there is but it's ineffective.

I know they argue their meriting bonuses before a bankruptcy judge. The bar is set so low for merit, the worst performances are deemed bonus worthy.

and then this part:
With Hostess out of business that means the closure of 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes and 570 bakery outlet stores throughout the United States, the company said.

I tried to find the names of the "investment firms". Guess it's private information or something. I couldn't find anything.

David , I think that the bonus thing is being played unfairly in the press.

The bonuses are NOT for past performance. They are being paid to the executives, and others, who have agreed to stay on and unwind the company. Without the incentive the execs would likely be inclined to leave and seek employment elsewhere given their career opportunities just went south!

Unwinding a company is not easy, it's complicated and needs experience to see it through successfully. HR is a huge component of winding down a large corporation and it is important that it be done properly.

It is important to note that the CEO took NO bonus and will stay on and bonuses were also paid to those below the executive level.

Don't construe my opinion as meaning I am generally in favour of huge corporate bonuses, especially in corporations that are under performing, but in cases like this they are needed to retain the appropriate staff until a shut down or sale is successfully completed.

Like I said up thread - nothing but disguised retention bonuses. Federal law is supposed to restrict "retention" bonuses that reward executives for sticking with distressed companies as they spiral into bankruptcy.

Too bad so many bankruptcy courts/judges let these "awards" slide. The only thing it upholds is that doing business badly is a worthy occupation.

Yes, they aren't mentioning that the bonuses go to the existing execs so they'll stay on and unwind the company.

The press also doesn't mention that the alternative - since these guys haven't done an exactly stellar job to this point - is to fire them just like the rest of the employees and for the court to appoint different folks to handle the wind down.

But in any event, the press has not covered the two leveraged vulture capital buyouts, loading the company down with debt and shoving off the pensions onto the gvt, that lead to the bankruptcy.

"This is the second Hostess bankruptcy since 2004. The BCTGM union took multiple concessions in the first bankruptcy, and offered multiple concessions on wages and benefits this time around. But the contract the company tried to unilaterally impose was so bad, with a 27-32% wage cut and benefit slashes and the elimination of the eight-hour workday, that 92% of workers rejected it. And after the strike initiated, Hostess moved right to shutting down the company rather than working with the union on a resolution.

In fact, Wall Street hedge funds and private equity firms own Hostess brands, and they took massive bonuses and payouts over the past eight years or so. They dumped the company pensions, unilaterally stopped making pension payments that would have totaled $160 million, and plan to pay themselves with the sale of the liquidated assets of the company. Their current CEO’s main credential for the job is his “expertise in corporate liquidations,” according to the union (he’s also seen his pay triple).

This is an object lesson in how management looks at labor relations these days. Workers are expected to take their lumps, and if they protest, management will just blow up the company. And the owners will still make a profit."

My husband worked for Hostess years ago...it was a God-send that he got a severience package, and did not work for them now. The People that Work for Hostess ARE the union. He says they want more, more, more and it squeezes a company to death. Greed of the people that are a part of the union that is what killed Hostess. Greed makes the world shut down...(and companies)

How can unmet demands by a union cause a company to go bankrupt? Seems like a perfect chance for a company to get out from under this more expensive labor force if they can't reach an agreement for renewing the labor contract.